Alliance plans to offload 65% of shares for $250m
Alliance Group has announced plans to sell a 65% stake in the farmer-owned co-operative to Irish meat processor Dawn Meats Group for $250 million.
Just back from a market trip to Malaysia, Singapore, Japan and China, Taggart told Rural News it is very hard to pick what the market will do in the coming season.
“It’s fair to say the crystal ball is probably cloudier than ever,” he quips.
“It would take a brave person to say lamb prices will be dramatically higher than last season.
“But there is no indication they will be dramatically lower either.”
Taggart says the confluence of exchange rates, stock availability and market demand make the job of forecasting prices extremely difficult.
“Most companies are pretty gun-shy, especially given what happened with prices last year.”
Taggart says the new lamb season has begun with a “pretty intensive procurement” battle, but he is unsure how long this will last, especially when the bulk of lambs come on stream.
“We’d prefer procurement prices to properly reflect the current market situation.”
Taggart concedes that another season of poor lamb prices will put even more pressure on hard-pressed sheepmeat producers, but says the company can only offer prices the market is willing to pay for product.
“We absolutely understand the need for sheep farmers to be profitable for the future of the industry,” he says. “As the only 100% NZ-owned farmer co-operative our whole reason is to make the best possible returns for our farmer suppliers and we need every link in the meat chain to be making money.”
Meanwhile, Taggart says the outlook for beef looks to be less rosy than the past couple of seasons.
“Beef prices have come off and we’ve probably seen the end of the high prices of the last couple of years,” he says.
However, the news is more positive on the venison front.
“With numbers down, markets on the up and overseas competition all but disappeared, venison prices look strong,” Taggart says.
But he says with deer numbers halving over the past decade the sector is starting from a very low base and has concerns these shortages and high prices could damage relationships if customer demands are not met.
Taggart says people must remember that meat co-products such as casings and pelts make up a significant part of the meat business.
“While there are some indications there may be a slight improvement in these markets, unfortunately we do not see any great increases going forward.”
In regard to the SFF/Shanghai Maling merger, Taggart says some disaffected SFF shareholders may come over to supply Alliance. “However, at this stage, there is no indication of a great tidal wave of farmers moving camp.”
